Source: New York Times
Author: Micheline Maynard

US Airways, in its latest effort to cut costs under bankruptcy protection, is stripping former executives and board members of their ability to travel free in first class, the airline said yesterday.

The move affects about 200 people, including the former chief executive, David N. Siegel, who resigned in April, and his predecessor, Stephen M. Wolf, who left in 2002.

The group was notified of the change in a letter from the airline's chief executive, Bruce R. Lakefield, which was mailed on Wednesday. Current board members and senior executives are not affected by the change.

The former executives and directors will still be able to fly free in coach, when space is available. But, they will have to give up those seats if a flight is oversold, meaning that the men and women who once handled the airline's most critical decisions can now be bumped for paying passengers.

Airlines traditionally have given free lifetime flying privileges to senior executives and directors as a perk. At US Airways, the 200 officers were able to book confirmed seats in first class free, although the benefit was taxable.

Lesser-ranking employees and their families can fly in coach class when space is available, and they can stand by for first class but are required to pay a fee if they get first-class seats. They can also be bumped if a flight is oversold. The benefit often continues after an employee retires, although airlines have started to limit how many free flights retired employees can book each year.

Christopher L. Chiames, US Airways senior vice president for corporate affairs, said last night that the airline did not expect to save a significant amount of money by eliminating the free first-class flights.

But he added, "We're changing the way we do business in multiple ways, and this is just one of them."

The move comes as US Airways is striving to cut spending so it can emerge from its second bankruptcy protection in two years. It filed for Chapter 11 protection on Sept. 12, after workers would not agree to $900 million in wage and benefit cuts.

Since then, the company has increased its demand for concessions to $1 billion a year. Yesterday, a federal bankruptcy court judge heard the first arguments in US Airways' bid to set aside contracts covering some unions, and replace them with less expensive terms. The federal bankruptcy code permits companies to void their labor contracts, if they can prove they cannot survive unless expenses are cut.

The airline also announced a tentative deal yesterday with the Communications Workers of America, which represents 6,000 customer service and reservations agents. The union did not release details. US Airways has already reached a deal with its pilots' union on $300 million a year in wage and benefit cuts.

Talks are continuing with mechanics and with flight attendants, who threatened to strike the airline if their contract is set aside. The communications workers had made a similar threat. Yesterday, US Airways said it would seek a court injunction to order striking workers to return to their jobs if they walk out.

In October, Judge Steven Mitchell imposed emergency pay cuts of 21 percent on the unions, with the exception of its pilots. The cuts are set to expire on Feb. 15. Salaried employees have taken cuts of 5 percent to 10 percent, although Mr. Lakefield has not taken a cut.